Available online at http://www.ijirr.

com

International Journal of Information Research and Review

OPEN ACCESS JOURNAL

Vol. 2, Issue, 07, pp. 933-944, July, 2015

ISSN: 2349-9141

Full Length Review Paper

A STUDY ON SUCCESS RATE OF CANDLESTICK USING BASIC PATTERNS OF JAPANESE
CANDLESTICK ANALYSIS IN INDIAN DERIVATIVE MARKET
*

Dr. Vasu, M.S.

College of Business and Economics, Wollega University, Ethiopia

*Corresponding Author
Received 23rd June 2015; Published 31st July 2015

Abstract
Candlestick is the most prevalent analysis tools and currently most of technical analysis programs use candlestick as a defau
default approach
of their charting programs. The patterns of candlestick can help traders to anticipate future prices of their portfolio
portfolios. In this study, the
researcher tried to identify which candle stick pattern will be valuable for the investors based on the timing of holding per
periods using
comparison of selected three company stocks. In this paper, the researcher tested the three component
component stocks of IT companies chosen
from index companies during May-July
July 2013 and used statistical tool ANOVA to examine which candlestick will be the most profitable
based on their own type. The researcher selected five signal based on the different candlestick
candlestick patterns because it is the most candlestick
signal patterns that appear in Indian National Stock Exchange.
Keywords: Patterns of Japanese Candlestick Analysis, Indian Derivative Market, stocks of IT companies
Copyright Dr. Vasu, M.S. This is an open access article distributed under the Creative Commons Attribution License, which permits unrestricted use,
distribution, and reproduction in any medium, provided the original work is properly cited.

To cite this paper: Dr. Vasu, M.S. 2015. A study on success rate of candlestick using basic patterns of japanese candlestick analysis in indian
derivative market, International Journal of Information Research and Review.
Review Vol. 2, Issue, 07, pp. 933-944,
944, July, 2015.

INTRODUCTION
Derivative means a forward, future, option or any other hybrid
contract of pre determined fixed duration, linked for the
purpose of contract fulfillment to the value of a specified real
or financial asset or to an index of securities.
Derivatives Markets
Derivatives markets broadly can be classified into two
categories, those that are traded on the exchange and those
traded one to onee or over the counter. They are hence known
as
Exchange Traded Derivatives
OTC Derivatives (Over The Counter)
THEORETICAL REVIEW OF LITERATURE
Candlestick charts basically convey the same type of
information represented in bar charts, but are visually
displayed differently. The Open, High, Low and Close of the
chosen trading period will be represented in a single candle.
A candlestick chart is much more appealing visually that the
standard bar charts. However, both charts require four
elements for construction, the Open, High, Low and Closing
prices for any given period of time.

Below are several examples of candlesticks and a definition

for each of the components. The body of a candlestick is
referred to as the real body and it represents the range between
the opening price and the closing price. This type of chart is
used to represent each time period in a candlestick format. Just
like with a bar chart, the candlestick
andlestick chart will display the
Open, High, Low and Close of a chosen period of time.
Candlesticks can be either solid or transparent, depending on
the similarity of the opening and closing price. When the
closing price is higher than the price at the op
open of the market,
the candlestick will be represented as transparent or empty.
If the market price closed lower than what it opened at, the
candlestick will be solid or filled in.

934

Dr. Vasu. A study on success rate of candlestick using basic patterns of Japanese candlestick analysis in Indian derivative market

Two lines that extend vertically above or below the real body
of the candlestick, represent the highs and lows during the time
period, but do not reflect the closing price. These lines are
referred to as shadows with the upper shadow representing the
highest prices and the lower shadows indicating the lowest
prices. If the body of the candlestick is black or filled in, it
indicates that the close during the chosen time period was
lower than the price at which the market opened at. This
generally indicates a bearish market. If the market closes at a
higher price than at what it opened at, the body of the
candlestick will be white or open and it indicates a bullish
market.

represented by lines extending from the body, are called

"shadows or tails."
CANDLESTICK PATTERNS
Basically there are five different patterns of candle stick are
there .They are

Doji
Hammer
Inverted Hammer
Bullish Engulfing
Bearish Engulfing

DOJI
The doji is a commonly found pattern in a candlestick chart of
financially traded assets (stocks, bonds, futures, etc). It is
characterized by being small in length-meaning a small trading
range-with an opening and closing price that are virtually
equal. The doji represents indecision in the market. A doji is
not as significant if the market is not clearly trending, as nontrending markets are inherently indicative of indecision. If the
doji forms in an uptrend or downtrend, this is normally seen as
significant, as it is a signal that the buyers are losing
conviction when formed in an uptrend and a signal that sellers
are losing conviction if seen in a downtrend.

INTRODUCTION TO CANDLESTICKS
The best way to explain is by using a picture: Candlesticks are
formed using the open, high, low and close.

FORMATION OF DOJI IN MULTI COMMODITY

EXCHANGE

If the close is above the open, then a hollow candlestick

(usually displayed as white) is drawn.
If the close is below the open, then a filled candlestick
(usually displayed as black) is drawn.
The hollow or filled section of the candlestick is called the
real body or body.
The thin lines poking above and below the body display the
high/low range and are called shadows.
The top of the upper shadow is the high.
The bottom of the lower shadow is the low.
STOCK
INVESTING
CANDLESTICKS

BASICS

OF

JAPANESE

Candlestick trading analysis does not require knowing intricate

formulas or ratios. Candlestick analysis does not require
massive amounts of education to effectively utilize the signals.
The stock investing basics of Japanese Candlesticks result in
clear and easy to identify patterns that demonstrate highly
accurate turns in investor sentiment. The average investor does
not have to be dependent on the investment professional, a
professional whose recommendation does not always have
your interest at the forefront. Whether totally unfamiliar with
investment concepts or very sophisticated in investment
experience, the Japanese Candlestick trading formations are
easily utilized. The signals and patterns are easy to see. As
illustrated, a stock price closing higher than where it opened
will produce a white candle. A stock price closing lower than
where it opened creates a black candle. The boxes formed are
called "the body". The extremes of the daily price movement,

HAMMER
A hammer sometimes indicates a bullish reversal. This is a
bullish line if it occurs after a significant downtrend. If the line
occurs at a significant up-trend, it is called a hanging man. A
hammer is identified by a small real body (i.e., a small range
between the open and closing prices) and a long lower shadow
(i.e., the low is significantly lower than the open, high, and
close).the body can be empty or filled-in.

Fig. Hammer

935

International Journal of Information Research and Review Vol. 2, Issue, 07, pp. 933-944, July, 2015

INVERTED HAMMER
A candlestick chart pattern that occurs when a security had
been declining in previous sessions , and the temporarily trades
high throughout the days session , but by the end of the day
the market realized it could not support that level of trading
and returned to a low level, closing below its opening price.
When charted, the inverted hammer appears identical to the
shooting star pattern.
BULLISH HAMMER
After an established downtrend
Hammer candles have a small real body that forms at the
upper end of the day trading
The candle can be either blue or red, analyst usually do
not differentiate
Lower wick at least twice as long as the real body
No (or almost no) upper wick
After a bearish sell-off a significant rally brings price back
up creating a long bottom wick. By the day end buyers are
able to push prices back to the upper range creating a short
body.
FORMATION OF HAMMER IN MULTI COMMODITY
EXCHANGE

The longer the candle, the more buyers were able to drive price
back up and the stronger the bullish signal this candle
provides.
Although above we state that most analysts do not care if the
small candle is red or blue, traders will actually take a blue
candle to suggest a stronger bullish signal. Buyers being
unable to bring the close price above the open price suggest
additional bullish strength. Generally the difference between
blue and red candles is minimal. The bullish Dragonfly Doji
serves as a stronger buy signal than the Hanging Man pattern.
Since a Dragonfly candle (where open and close are identical,
but we see a low similar in length to the Hanging Man) reflects
more uncertainly and lack of direction, candlestick analysts
will usually take it as a stronger buy signal.
BULLISH INVERTED HAMMER CANDLESTICK
Day-one is a red day, continuing an established trend and
closing at the lower trading range near the day low.
The second day is red or blue day that also trades at a lower
range with the openingand closing near each other.
The upper wick of the second day should be at least twice
as long as the body thelower wick of the second day should
be non-existent or very little.
The Inverted Hammer appears in a market that opens at or near
its low, creating a candle with a small real body. During the
day buyers rallied price fairly high, but were unable to sustain
the rally. In a market characterized by downtrend, bulls are
able to rally price up briefly, but not enough to close above the
day open. This can be a warning for shorts to anticipate a
further, more sustainable bullish rally. The reversal trend is
confirmed by bullish moves the next day.
FORMATION OF INVERTED HAMMER IN MULTICOMMODITY EXCHANGE

The Hammer pattern signifies a weakening in bearish

sentiment. The long lower wick signifies an initial
continuation of the downtrend. However, renewed buying
sentiment acts as support and drives the price higher to close
near its opening price.

The strength of a Hammer formation depends on where it

appears. If a hammer forms near support levels, then the
likelihood of a strong bullish reversal is high. However, if the
hammer forms in the middle of a trading range it tends to have
little significance. In ideal conditions traders want the wick
length to be several times longer than the body of the candle.

In day-three the higher the candle holds above day-twos body,

the more likely the shorts will cover their positions, hence
leading to the weakening of a bearish market. Many bottom
pickers will start longing the market once that occurs, leading
to a bullish reversal.
BULLISH ENGULFING
When the bullish signal occurs, it means that the sellers are
overwhelmed and the buyers are ready to jump back in and
take control.

936

Dr. Vasu. A study on success rate of candlestick using basic patterns of Japanese candlestick analysis in Indian derivative market

FORMATION OF BEARISH ENGULFI IN MULTI

COMMODITY EXCHANGE

The demand is greater than the supply, in other words. The

name comes from the second day of trading stock when the
second candle engulfs the body of the first candle, while
closing near the top of the range. A bullish engulfing pattern is
a two-candle bottom reversal pattern that signals the end of a
downtrend. It may reverse into an uptrend or change to a
sideways trend; in either case it signals a trend change. This
pattern occurs when there is a downtrend underway and should
appear when a bottom has been reached.
FORMATION OF BULLISH ENGULFING IN MULTI
COMMODITY EXCHANGE

BEARISH ENGULFING
A bearish engulfing pattern is the inverse of the bullish
engulfing pattern and occurs in an uptrend.

Below are the characteristics of a Bearish Engulfing

Only valid if it occurs in an uptrend
First candle is bullish, second candle is bearish (different
colors)
Second candles real body engulfs first candles real body
(ignore wicks)
Bonus if volume is heavy on second candle
Bonus if first candle real body is small in comparison to
the second candle real body
Bonus if second candle engulfs more than one candle
Bonus if second candle High/Low engulfs first candles
High/Low

SUMMARY OF CANDLESTICKS
Candlesticks are formed using the open, high, low and close
If the close is above the open, then a hollow candlestick
(usually displayed as white) is drawn.
If the close is below the open, then a filled candlestick
(usually displayed as black) is drawn.
The hollow or filled section of the candlestick is called the
real body or body.
The thin lines poking above and below the body display the
high/low range and are called shadows.
The top of the upper shadow is the high.
The bottom of the lower shadow is the low.
Long bodies indicate strong buying or selling. The longer
the body is, the more intense the buying or selling pressure.
Short bodies imply very little buying or selling activity. In
street forex lingo, bulls mean buyers and bears mean
sellers.
Upper shadows signify the session high.
Lower shadows signify the session low.
Candlesticks with a long upper shadow, long lower shadow
and small real bodies are called spinning tops. The pattern
indicates the indecision between the buyers and sellers
Marubozu means there are no shadows from the bodies.
Depending on whether the candlesticks body is filled or
hollow, the high and low are the same as its open or close.
Doji candlesticks have the same open and close price or at
least their bodies are extremely short.
The hammer is a bullish reversal pattern that forms during
a downtrend. It is named because the market is hammering
out a bottom.
The hanging man is a bearish reversal pattern that can also
mark a top or strong resistance level.
The inverted hammer occurs when price has been falling
suggests the possibility of a reversal.
The shooting star is a bearish reversal pattern that looks
identical to the inverted hammer but occurs when price has
been rising.
NEED FOR THE STUDY
Derivatives market provides a good source of investment
where investors do not come forward to invest due to lack of
proper information and high risk. Hence there arises a need to
the descriptive study of commodities.

937

International Journal of Information Research and Review Vol. 2, Issue, 07, pp. 933-944, July, 2015

Table 1. Comparative statement of the success rate under different Candlestick patterns of selected IT companies
over the study period
The trend of the market is to be observed
If the market trend is upward

For Doji, Hammer and Inverted Hammer

then target will be
Target= High + (High - Low)
then target will be
Target= Low - (High - Low)

If the market trend is downward

For Bullish Engulfing and Bearish Engulfing

then target will be
Target= High + (Open - Close)
then target will be
Target= Low - (Open - Close)

Graph 1. The success rate under different Candlestick patterns of selected IT companies over the study period

COMPANY
INFOSYS
TCS
WIPRO

DOJI
80%
80%
40%

HAMMER
60%
40%
80%

INVERTED HAMMER
40%
60%
60%

BULLISH ENGULFING
60%
60%
60%

BEARISH ENGULFING
60%
40%
60%

TOTAL
60%
56%
60%

Table 1. Success Rate of DOJI on INFOSYS

Values
O- 2431.35
H-2432.5
L-2420.5
C-2430.55
O-2424.4
H-2429.3
L- 2421.4
C-2425.5
O-2501.85
H-2508.5
L-2500.1
C-2503.15
O- 2489.95
H-24993.2
L-2486.3
C-2488.1
O-2467.4
H-2471.1
L-2462.5
C-2468.25
O-2409.2
H-2413.2
L-2403.2
C-2409.4
O- 2413.2
H-2415.2
L-2409.5
C-2413.30

Difference

INFOSYS
Target

Result

Values
O-2367.4
12
2444.5
Success @
H-2372.8
2446.4
L- 2364.4
C-2366.5
O-2381.7
7.9
2413.5
Failed
H-2383.7
L-2376.8
C-2380.75
O- 2371.75
7.95
2492.15
Success @
H-2375.65
2479.05
L-2370
C-2372.75
O-2375.75
6.9
2479.4
Success @
H-2382.85
2468.9
L-2375
C-2376.75
O-2366.70
8.6
2479.7
Success @
H-2367.9
2481.75
L-2363.8
C-2366.60
O- 2434.35
Success @
H-2436.5
10
2423.2
2426.75
L-2430.5
C-2434.55
O-2427.4
Success @
H-2429.3
5.6
2420.8
2422.30
L- 2423.4
C-2427.5
O-2502.85
H-2507.5
L-2500.1
C-2502.15
INTERPRETATION: From the above data the success rate of DOJI is 80%.

INFOSYS
Difference
Target

Result

8.4

2381.2

Success @
2382.30

6.9

2390.6

Failed

5.65

2381.4

Success @
2383.30

7.85

2390.7

Success @
2393.30

4.1

2372

Success
@2375.25

2442.5

Failed

5.9

2435.2

Success @
2437.3

7.4

2514.9

Success
@2520.25

938

Dr. Vasu. A study on success rate of candlestick using basic patterns of Japanese candlestick analysis in Indian derivative market

Table 2.Success Rate of HAMMER on INFOSYS

INFOSYS
Values
O- 2432.35
H-2432.35
L-2420.5
C-2430.55
O-2470.45
H-2470.45
L- 2464.8
C-2468.15
O-2393.15
H-2393.15
L-2385.2
C-2391
O-2490.25
H-2490.25
L-2484.20
C-2488.05
O- 2550.25
H-2550.25
L-2535.30
C-2546.35
O- 2431.35
H-2431.35
L-2420.5
C-2429.55
O-2460.45
H-2460.45
L- 2452.05
C-2458.15

INFOSYS
Values
O-2392.15
H-2392.15
L-2385.2
C-2390
5.65
22476.1
Success
O-2496.25
@ 2480.20
H-2496.25
L-2486.20
C-2494.25
8.3
2401.45
Failed
O- 2540.60
H-2540.60
L-2532.30
C-2538.35
6.05
2496.3
Success
O- 2430.35
@2499.25
H-2430.35
L-2420.5
C-2427.55
14.95
2565.20
Failed
O-2470.4
H-2470.4
L- 2461.8
C-24768.15
Success
O-2390.5
11.30
2442.65
H-2390.5
@2449.25
L-2380.2
C-2387
Failed
O-2520.25
8.40
2468.85
H-2520.30
L-2505.20
C-2517.25
O- 2558.50
H-2558.50
L-2548.30
C-2555.35
INTERPRETATION: From the above data the success rate of HAMMER is 60%.
Difference
12.30

Target
2444.65

Result
Success
@ 2446.4

Difference
7.35

Target
2399.5

Result
Success
@2402.25

10.05

8.90

2506.30

Failed

2541.5
Success

10.30

2440.65

8.6

@2445.25
Failed

2479
Success

10 .70

2401.20

@2478.25
Success
@2405.25

15.1

2535.40
Success

10.20

2568.70

@2538.25
Failed

Table 3. Success Rate of INVERTED HAMMER on INFOSYS

INFOSYS
INFOSYS
Values
Difference Target
Result
Values
Difference
O- 2405.1
14.2
5390.15
Failed
O- 2238
14.95
H-2418.55
H-2550.25
L-2404.45
L-2535.30
C-2404.45
C-2235.30
O-2245.75
7.75
2561.25
Success
O- 2420.55
28.60
H-2531.5
@ 2561.75
H-2449.15
L- 2520.5
L-2420.55
C-2525.8
C-2431.15
O-2411.55
8.25
2403.15
Failed
O- 2505.1
14.2
H-2419.65
H-2518.55
L-2411.4
L-2504.45
C-2412.4
C-2504.15
O- 2240
15.5
2565.75
Failed
O- 2307.1
H-2550.25
H-2320.55
L-2535.30
L-2306.45
14
C-2240.35
C-2306.15
O- 2520.85
28.6
5691.95
Success
O-2520.55
15
H-2549.15
@2489.3
H-2535.5
L-2520.55
L- 2520.5
C-2531.15
C-2525.8
O- 2405.1
14.2
2432.75
Failed
O-2421.55
8.15
H-2418.55
H-2429.65
L-2404.45
L-2421.4
C-2404.15
C-2422.4
O-2520.5
11
2542
Failed
O- 2540.05
10..25
H-2531.5
H-2550.25
L- 2520.5
L-2540
C-2523.8
C-2240.35
O-2401.49
2417.90
Failed
O- 2410.85
8.6
H-2409.65
8.25
H-2419.15
L-2401.4
L-2410.55
C-2402.4
C-2412.15
INTERPRETATION: From the above data the success rate for Inverted Hammer is 40%

Target
2565.20

Result
Failed

2477.75

Failed

2532.75

2334.45
2550.5

Success
@2535.10

Success
@2337.06
Failed

2437.8

Success
@2439.50

2560.5

Failed

2427.75

Success
@2430.6

939

International Journal of Information Research and Review Vol. 2, Issue, 07, pp. 933-944, July, 2015

Table 4. Success Rate of INVERTED HAMMER on INFOSYS

INFOSYS
INFOSYS
Values
Difference Target
Result
Values
Difference
O- 2405.1
14.2
5390.15
Failed
O- 2238
14.95
H-2418.55
H-2550.25
L-2404.45
L-2535.30
C-2404.45
C-2235.30
O-2245.75
7.75
2561.25
Success
O- 2420.55
28.60
H-2531.5
@ 2561.75
H-2449.15
L- 2520.5
L-2420.55
C-2525.8
C-2431.15
O-2411.55
8.25
2403.15
Failed
O- 2505.1
14.2
H-2419.65
H-2518.55
L-2411.4
L-2504.45
C-2412.4
C-2504.15
O- 2240
15.5
2565.75
Failed
O- 2307.1
H-2550.25
H-2320.55
L-2535.30
L-2306.45
14
C-2240.35
C-2306.15
O- 2520.85
28.6
5691.95
Success
O-2520.55
15
H-2549.15
@2489.3
H-2535.5
L-2520.55
L- 2520.5
C-2531.15
C-2525.8
O- 2405.1
14.2
2432.75
Failed O-2421.55
8.15
H-2418.55
H-2429.65
L-2404.45
L-2421.4
C-2404.15
C-2422.4
O-2520.5
11
2542
Failed
O- 2540.05
10..25
H-2531.5
H-2550.25
L- 2520.5
L-2540
C-2523.8
C-2240.35
O-2401.49
2417.90
Failed
O- 2410.85
8.6
H-2409.65
8.25
H-2419.15
L-2401.4
L-2410.55
C-2402.4
C-2412.15
INTERPRETATION: From the above data the success rate for Inverted Hammer is 40%

Target
2565.20

Result
Failed

2477.75

Failed

2532.75

2334.45
2550.5

Success
@2535.10

Success
@2337.06
Failed

2437.8

Success
@2439.50

2560.5

Failed

2427.75

Success
@2430.6

Table 5. Success Rate of Bearish Engulfing on INFOSYS

INFOSYS
Values
O- 2425.5
H-2428.7
L-2411.25
C-2417.65
O-2558.5
H-2559.7
L- 2549.9
C-2550.75
O-2534
H-2534.75
L-2526.7
C-2527.35
O- 2546.8
H-2552.5
L-2536.5
C-2537.8
O- 2422.5
H-2425.95
L-2414.5
C-2415.3
O- 2532.5
H-2535.95
L-2524.5
C-2525.3

Difference
7.85

Target
2436.55

Result
Success
@ 2430

7.75

2242.15

Failed

6.65

2220.05

Failed

2527.5

Success
@2515.1

7.2

2407.3

Success
@2406.1

Success
7.2
2543.15

@2545.10

INFOSYS
Values
O-2338.3
H-2347.75
L-2337.9
C-2347.75
O- 2430.8
H-2436.85
L-2428.35
C-2435.25
O-2386.65
H-2396.75
L-2386.65
C-2396.7
O- 2466.3
H-2473.9
L-2463.1
C-2471.65
O-2521.7
H-2529.4
L- 2521.7
C-2529.15
O-2518.3
H-2227.75
L-2517.9
C-2526.75

Difference
9.45

Target
2357.15

Result
Success
@2361.50

4.45

2441.25

Failed

10.05

2406.8

Success
@2410.30

5.35

2479.25

Failed

7.45

2536.85

Success
@2539.10

8.45

2236.2

Failed

2427.2

Success
@2432

O- 2576.3
5.35
Failed
O-2408.3
H-2583.9
2589.25
H-2417.75
L-2573.1
L-2407.9
9.45
C-2581.65
C-2417.75
O-2471.7
4.45
2483.85
Success
H-2479.4
@2488.30
L- 2471.7
C-2479.15
INTERPRETATION: From the above data the success rate of BEARISH ENGULFING is 60%

940

Dr. Vasu. A study on success rate of candlestick using basic patterns of Japanese candlestick analysis in Indian derivative market

Table 6. Success Rate of DOJI on TCS

INFOSYS
INFOSYS
Values
Difference
Target
Result
Values
O- 1660.4
19.4
1633.9
Success
O-1858.7
H-1672.7
@ 1619.85
H-1867.4
L-1653.3
L-1846.6
C-1662.15
C-1856
O-1908.9
39.95
1961.75
Success
O- 1880.85
H-1921.8
@ 1965.55
H-1893.4
L- 1881.85
L-1873.3
C-1909.6
C-1881.85
O-1878.7
20.8
1845.8
Success
O-1780.25
H-1887.4
@ 1845.15
H-1790.50
L-1866.6
L-1770.35
C-1876
C-1782.5
O- 1780.85
1
1794.4
Success
O- 1610.4
H-1793.4
@ 181.85
H-1622.7
L-1773.3
L-1603.3
C-1781.85
C-1612.15
O-1880.25
20.15
1910.65
Failed
O- 1760.4
H-1890.50
H-1772.7
L-1870.35
L-1754.3
C-1882.5
C-1762.15
O- 1760.4
O-1608.9
H-1772.7
19.4
1792.1
Success
H-1621.85
L-1753.3
@ 1795.10
L- 1601.8
C-1762.15
C-1609.6
O- 1860.4
14.4
1884.1
Success
O-1658.7
H-1869.7
@ 1885.55
H-1667.4
L-1855.3
L-1646.6
C-1862.15
C-1656
O-1608.9
10.95
1626.75
Success
H-1615.8
@ 1628.10
L- 1604.85
C-1909.6
INTERPRETATION: From the above data the success rate of DOJI is 80%

Difference
20.8

Target
1888.2

Result
Success
@ 1890.15

20.1

1913.5

Success
@ 1915.1

20.15

1810.65

Success
@ 1812

19.4

1642.1

Failed

18.4

1791.1

Success
@ 1795

20.5

1641.5

Success
@ 1643.15

20.8

1688.2

Failed

Table 7. Success Rate of HAMMER on TCS

INFOSYS
INFOSYS
Values
Difference
Target
Result
Values
O- 1609.35
21.95
1566.7
Success
O-1650.65
H-1610.6
@ 1553.85
H-1661.9
L-1588.65
L-1602.4
C-1603.35
C-1658.2
O-1847.55
24.35
1878.7
Failed
O- 1821.45
H-1854.35
H-1833.2
L- 1830
L-1899.95
C-1852.55
C-1833.2
O-1550.65
59.5
1621.4
Success
O-1641.65
H-1561.9
@1630.65
H-1641.65
L-1502.4
L-1614.4
C-1558.2
C-1634.05
O- 1621.45
33.25
1666.45
Failed
O-1510.65
H-1633.2
H-1521.9
L-1599.95
L-1501.4
C-1633.2
C-1512.2
O-1631.65
27.25
1658.9
Failed
O- 1909.35
H-1631.65
H-1910.6
L-1604.4
L-1888.65
C-1624.05
C-1903.35
O-1550.65
O-1947.55
H-1551.9
49.5
1601.4
Success
H-1954.35
L-1502.4
@1605.65
L- 1930
C-1558.2
C-1952.55
O- 1709.35
O-1750.65
H-1710.6
H-1761.9
L-1689.65
20.95
1731.55
Failed
L-1701.4
C-1703.35
C-1758.2
O-1747.55
H-1754.35
Success
L- 1730
24.35
1778.7
@1780.10
C-1752.55
INTERPRETATION: From the above data the success rate of HAMMER is 40%

Difference

Target

Result

59.5

1721.4

Failed

33.25

1866.45

Failed

27.25

1668.9

Success
@1671.2

20.5

1542.4

Failed

21.95

1932.5

Failed

1978.7
24.35

60.5

Success
@1980

Failed
1822.4

941

International Journal of Information Research and Review Vol. 2, Issue, 07, pp. 933-944, July, 2015

Table 8. Success Rate of INVERTED HAMMER on TCS

INFOSYS
INFOSYS
Values
Difference Target
Result
Values
O- 1647
19.55
1620.65
Success
O-1684.65
H-1659.75
@ 1603.3
H-1694.8
L-1640.2
L-1675
C-1640.2
C-1677.25
O-1581.85
17.6
1617.1
Failed
O- 1970
H-1599.05
H-1982.3
L- 1581.45
L-1966.5
C-1587.45
C-1966.5
O-1584.65
7.4
1602.2
Success
O-1687.15
H-1594.8
@1618.95
H-1604.3
L-1575
L-1680.65
C-1577.25
C-1690.15
O- 1870
15.8
1850.7
Success
O- 1747
H-1882.3
@ 1626.6
H-1760.75
L-1866.5
L-1740.2
C-1866.5
C-1740.2
O-1587.15
23.65
1557
Failed
O- 1747
H-1604.3
H-1759.75
L-1580.65
L-1740.2
C-1590.15
C-1740.2
O- 1747
O-1681.85
H-1758.75
18.55
1777.3
Success
H-1699.05
L-1740.2
@17780.5
L- 1681.45
C-1740.2
C-1687.45
O- 1647
O-1784.65
H-1655.75
15.55
H-1794.8
L-1640.2
1671.3
Failed
L-1775
C-1640.2
C-1777.25
O-1781.85
H-1799.05
17.9
1816.95
Success
L- 1781.45
@1820
C-1787.45
INTERPRETATION: From the above data the success rate of INVERTED HAMMER

Difference

Target

Result

7.4

1702.2

Failed

1998.1

Success
@1998.9

23.65

1627.95

Failed

20.55

1781.3

Success
@1784

19.55

1779.3

Failed

17.6

1716.65

Success
@1718.3
5

7.4

1802.2

Success
@1803.5

15.8

is 60%

Table 9. Success Rate of Bullish Engulfing on TCS

INFOSYS
INFOSYS
Values
Difference
Target
Result
Values
Difference
O- 1923.45
26.75
1991.6
Failed
O-1960.3
16.55
H-1964.85
H-1976.5
L-1923.8
L-1952.7
C-1950.2
C-1976.85
O-1817.6
32
1881.6
Success
O- 1798.05
6.45
H-1849.6
@ 1882.3
H-1834.5
L- 1813.5
L-1797.85
C-1849.6
C-1834.5
O-1860.3
16.55
1836.15
Failed
O-1624.9
26
H-1876.5
H-1653.85
L-1852.7
L-1622.45
C-1876.85
C-1650.9
O- 1698.05
6.45
1770.95
Success
O-1820.9
H-1734.5
@ 1782.2
H-1853.85
L-1697.85
L-1822.45
22
C-1734.5
C-1850.9
O-1824.9
26
1879.85
Success
O- 1698.05
6.45
H-1853.85
@1880.25
H-1734.5
L-1822.45
L-1697.85
C-1850.9
C-1734.5
O-1720.9
O-1720.9
O-1524.9
26
H-1753.85
H-1753.85
H-1553.85
L-1722.45
22
1775.85
L-1722.45
L-1522.45
C-1750.9
C-1750.9
C-1550.9
O- 1823.45
26.75
1891.6
O- 1823.45
O-1620.9
H-1864.85
H-1864.85
H-1653.85
L-1823.8
L-1823.8
L-1622.45
22
C-1850.2
C-1850.2
C-1650.9
O-1917.6
32
1981.6
O-1917.6
H-1949.6
H-1949.6
L- 1913.5
L- 1913.5
C-1949.6
C-1949.6
INTERPRETATION: From the above data the success rate of BULLISH ENGULFING is 60%.

Target
1986.15

Result
Failed

1870.95

Success
@ 1882.2

1679.85

Success
@1680.25

1875.85

Failed

1770.95

Success
@ 1782.2

1579.85

Success
@1580.25

1675.85

Failed

942

Dr. Vasu. A study on success rate of candlestick using basic patterns of Japanese candlestick analysis in Indian derivative market

Table 10. Success Rate of BEARISH ENGALFING on TCS

INFOSYS
INFOSYS
Values
Difference
Target
Result
Values
Difference
O- 1877.4
28.2
1853.85
Failed
O-1766.55
68.85
H-1878.9
H-1766.55
L-1856.65
L-1781.95
C-1852.7
C-1797.7
O-1591.2
15.3
1609.5
Success
O-1801.85
29.8
H-1594.2
@1630.65
H-1803
L- 1562.9
L-1772.05
C-1575.9
C-1773.95
O-1666.55
68.85
1513.1
Failed
O-1550.23
3.98
H-1666.55
H-1570.25
L-1581.95
L-1545.23
C-1597.7
C-1546.25
O-1601.85
29.8
1542.25
Failed
O-1791.2
15.3
H-1603
H-1794.2
L-1572.05
L- 1762.9
C-1573.95
C-1775.9
O-1650.23
3.98
1641.25
Success
O-166.55
68.85
H-1670.25
@ 1636.50
H-1666.55
L-1645.23
L-1581.95
C-1646.25
C-1597.7
O-1660.23
5.98
1676.23
Failed
O-1701.85
29.8
H-1670.25
H-1703
L-1645.23
L-1772.05
C-1654.25
C-1773.95
O- 1577.4
28.2
1553.85
Failed
O-1850.23
3.98
H-1578.9
H-1870.25
L-1556.65
L-1845.23
C-1552.7
C-1846.25
O-1691.2
15.3
1609.5
Success
H-1694.2
@1630.65
L- 1662.9
C-1675.9
INTERPRETATION: From the above data the success rate of BEARISH ENGULFING is 40%

Target
1813.1

Result
Failed

1842.25

Failed

1541.25

Success
@ 1536.50

1809.5

Success
@1830.65

1513.1

Failed

1742.25

Failed

1841.25

Success
@ 1836.50

Difference
13.6

Target
413.9

Result
Failed

19.5

449.8

Failed

18.3

450

Success
@ 451.05

8.85

556.1

Failed

445.7

Success
@551.30

13.6

513.9

Failed

19.5

649.8

Failed

Table 11. Success Rate of DOJI on WIPRO

INFOSYS
INFOSYS
Values
Difference
Target
Result
Values
O- 632.35
18.3
650
Success
O-390.50
H-631.7
@ 651.05
H-400.30
L-613.4
L-386.70
C-631.7
C-370.25
O-668.8
8.85
656.1
Failed
O-410.25
H-673.8
H-430.30
L- 664.95
L-410.80
C-670.35
C-407.90
O-520.80
545.7
Success
O- 432.35
H-530.50
15.2
@551.30
H-431.7
L-515.30
L-413.4
C-520.25
C-431.7
O-490.50
13.6
6500.3
Failed
O-568.8
H-500.30
H-573.8
L-486.70
L- 564.95
C-470.25
C-570.35
O-510.25
19.5
549.8
Failed
O-420.80
H-530.30
H-430.50
L-510.80
L-415.30
C-507.90
C-420.25
O- 332.35
18.3
350
Success
O-590.50
H-331.7
@ 351.05
H-500.30
L-313.4
L-586.70
C-331.7
C-570.25
O-368.8
8.85
356.1
Failed
O-610.25
H-373.8
H-630.30
L- 364.95
L-610.80
C-370.35
C-607.90
O-420.80
445.7
Success
H-430.50
15.2
@551.30
L-415.30
C-420.25
INTERPRETATION: From the above data the success rate of DOJI is 40%

15.2

943

International Journal of Information Research and Review Vol. 2, Issue, 07, pp. 933-944, July, 2015

Table 12. Success Rate of HAMMER on WIPRO

INFOSYS
INFOSYS
Values
Difference
Target
Result
Values
O- 625.35
18.3
650
Success
O- 419.5
H-631.7
@ 651.05
H-419.55
L-613.4
L-402.05
C-6131.7
C-417.45
O-670.95
18.65
689.5
Failed
O-406.65
H-670.95
H-410.35
L- 652.3
L-399.9
C-668.2
C-408.4
O-668.95
10.2
683.65
Success@
O- 525.35
H-673.45
689.75
H-531.7
L-663.25
L-513.4
C-672.95
C-5131.7
O- 519.5
17.5
537.05
Success
O-370.95
H-519.55
@502.05
H-370.95
L-502.05
L- 352.3
C-517.45
C-368.2
O-506.65
10.45
520.8
Success
O-468.95
H-510.35
@536.65
H-473.45
L-499.9
L-463.25
C-508.4
C-472.95
O- 325.35
18.3
350
Success
O- 619.5
H-331.7
@ 351.05
H-619.55
L-313.4
L-602.05
C-3131.7
C-617.45
O-470.95
18.65
489.5
Failed
O-606.65
H-470.95
H-610.35
L- 452.3
L-599.9
C-468.2
C-608.4
O-568.95
10.2
583.65
Success
H-573.45
@ 589.75
L-563.25
C-572.95
INTERPRETATION: From the above data the success rate of HAMMER is 80%.

SCOPE OF THE STUDY

The study is confined to some of the Indices in the National
Stock Exchange such as INFOSYS, TCS and WIPRO
STATEMENT OF THE PROBLEM

Difference
17.5

Target
437.05

Result
Success
@440.05

10.45

420.8

Success
@436.65

18.3

550

Success
@551.05

18.65

389.5

Failed

10.2

483.65

Success
@ 489.75

17.5

637.05

Success
@602.05

10.45

620.8

Success
@636.65

PERIOD OF THE STUDY

The period of study is 2 months (may-july) 2013
LIMITATIONS OF THIS STUDY

Individual investors are large in number but their investible

resources are comparatively smaller. They generally lack the
skill to carry out extensive evaluation and analysis before
investing. In this way the Technical Analysis will be the one of
the way to make the investor well knowledge.

Detail study of the topic was not possible due to time

constraint.
Everything should be considered at market movement.
Same outcomes may not be for all commodities.
Only few commodities were studied through
Doji, hammer, inverted hammer, bullish, bearish engulfing.

OBJECTIVES OF THE STUDY

FINDINGS

DATA ANALYSIS AND INTERPRETATION

To ensure the importance of Candlestick analysis

To understand the different patterns of Candlesticks
To calculate the Success Rate of candlestick patterns on
selected IT companies
To suggest investment (Buying or Selling) decisions.

Derivative provides a good source of investment.

Market movement is only according to supply and demand.
Investors have the choice of both physical delivery and
Roll over contracts.
The success rate of INFOSYS is 60% over the study
period.
The success rate of TCS is 56% over the study period.
The success rate of WIPRO is 60% over the study period.
SUGGESTIONS
Market intermediaries should take more efforts on
spreading awareness about derivatives.
Risk is more as compared to commodity and equity market.

944

Dr. Vasu. A study on success rate of candlestick using basic patterns of Japanese candlestick analysis in Indian derivative market

Investment decisions can be taken through DOJI as

compared to other tools.
The decision from BULLISH ENGULFING tool has
consistency from others.
Investment in COMPANY futures based on technical
analysis is better in short term only.
CONCLUSION
Based on the study it can be concluded that derivatives provide
good source of investment and decisions can be taken through
candlestick analysis which is according to the market
movement.

********

REFERENCES
Kevin Alvoti and Deddy P. Koesindartoto, 2014. Japanese
Candlestick Technical Trading Strategies in Indonesia
Capital Market, Proceedings of 7th Asia-Pacific Business
Research Conference, Singapore ISBN: 978-1-922069-580, Pp: 1-13
Goo, Yeong-Jia., Chen, Dar-Hsin., Chang, Yi-Wei. 2007.The
application of Japanese
Candlestick Trading Strategies In Taiwan, Investment
Management and Financial
Innovations, Vol. 4, Issue 4.
http://www.nseindia.com/
http://www.nseindia.com/content/indices/ind_nifty.html
http://www.sharekhan.com/stock-market/11/home.html
http://www.moneycontrol.com